Junior Discovers Spodumene at James Bay Project

Quebec Precious Metals Corp. (QPM:TSX.V; CJCFF:OTCQB;YXEP:FSE) announced that it has discovered spodumene-bearing pegmatite mineralization at its Elmer East project in the James Bay region.

The outcrop with visible spodumene, known as the Ninaaskumuwin Showing ("thankful" in the East Cree language), is about 170 meters long by 40 meters with an apparent thickness of 40 meters.

The first assays from the prospecting campaign at the project are expected in November. The company said it would continue field work as long as weather conditions allowed.

"We are very impressed by the initial exploration success of the team in the field with our first spodumene discovery in the James Bay region, which we recognize as a prolific and rapidly emerging hard rock lithium district," QPM Chief Executive Officer Normand Champigny said. "With many high priority target areas that have yet to be examined, this discovery bodes well for the remaining field program."

Many lithium deposits in the region are hosted in pegmatite rocks, leading the company to take another look at its 1,338 claims cover 697 square kilometers, all 100%-owned, now that it has become clear how much lithium is needed for the green energy transition.

"We know we have pegmatite on our gold projects, but we didn't focus on lithium," Champigny has said. "That was not the purpose of the creation of the company. But we almost have a moral obligation to find out. And so that's what we're doing now."

The pegmatite is open along the strike, QPM noted. "The outcrop is well mineralized in spodumene in a highly fractionated pegmatite dyke with well-formed pale green spodumene crystals ranging in length from a few centimeters to 50 (centimeters)."

The Ninaaskumuwin Showing is about 45 kilometers northwest of Allkem Ltd.'s (OROCF;OTCMKTS) James Bay project, which has a recently announced mineral resource of 110.2 million tonnes (Mt) at 1.3% Li2O, the company said.

The field work was done by GeoVector Management Inc. with the guidance of ALS GoldSpot Discoveries Ltd.

The Catalyst: Lithium Deficit Looms

Western countries are trying to shift supply chains for the vital battery metal away from South America and China, which has less than a quarter of the world's lithium resources but controls about two-thirds of the world's lithium processing and refining capacity, Rystad Energy reported.

The deficit between lithium demand and production and highly probable and probable lithium projects will be over 3.5 million Mt by 2040, according to Benchmark Mineral Intelligence.

In addition to Allkem, QPM's Elmer East project is also located north to northwest of significant lithium deposits being developed by Critical Elements Corp. (CRE:TSX.V), and Investissement Québec and Livent Corp. (LTHM:NYSE)

Also in James Bay, Patriot Battery Metals Inc. (PMET:CA) discovered a 4.3-kilometer trend of spodumene pegmatite at its Corvette project in 2017.

"We believe the Corvette property is evolving into a world-class spodumene resource," analysts Anoop Prihar and Alex Riazanov wrote for Eight Capital. "Based on the drill results released to date, we estimate the CV5 zone contains approximately 130mm tonnes of 1.16% Li2O mineralization. This, in turn, is likely sufficient to allow for 800,000 tonnes of spodumene production for 20 years. On this basis, PMET compares favorably to the highest-quality spodumene resources globally."

The company also has entered a binding memorandum of understanding with Idaho Champion Gold Mines Canada Inc. (ITKO:CNX) for Idaho Champion to acquire a 100% interest in two other James Bay lithium pegmatite projects. QPM has 6% of its shares.

Lithium Fundamentals to 'Remain Robust'

The Eight Capital analysts predicted that lithium market deficits would widen into the late 2020s, and those shortfalls will be driven by demand in North America.

The United States' electric vehicle (EV) penetration of 6% lags China's 26% and Europe's 20%, the Eight Capital analysts noted. But President Joe Biden's administration has committed to a target of 50% of new vehicle sales being EVs by 2030.

"We estimate North American lithium nameplate production capacity will be 262,900 LCE (million tonnes lithium carbonate) 2026 based on projects that currently have completed a Definitive Feasibility Study (DFS)," Prihar and Riazanov wrote. "Although this is a significant increase from the current North American production capacity of 6,000 tonnes LCE, it's still more than 128,000 tonnes short of what we anticipate will be required by the battery plants. As such, we anticipate the fundamentals underlying lithium demand to remain robust."

Lithium is a soft, silvery metal with highly reactive and flammable properties. It is a major component of electric vehicle (EV) batteries, and is also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.

QPM said both its Sakami and Elmer East projects in James Bay have key mineral indicators and rock geochemistry highlighting lithium-cesium-tantalum pegmatite anomalies.

"It is to be noted that for the Sakami project the lithium targets identified have sometimes overlapping potential for the discovery of both lithium-bearing pegmatites and gold mineralization," the company said in a release.

Two main lithologic assemblages are present at the Cheechoo-Eleonore Trend project, QPM said.

"The abundance of pegmatites and geochemical anomalies suggest a strong lithium potential," the company said.  

Ownership and Share Structure

Major mining company Newmont Corp. (NEM:NYSE) owns about 13% of QPM. Government-backed Caisse de Dépôt et Placement du Québec and other Québec institutions own about 12%.

QPM management and insiders own about 15%, including non-executive Chairman James Shannon with 905,000 shares and Champigny with 277,000 shares, the company said.

The rest, 60%, is retail.

The company is covered by newsletter writer Chris Temple of The National Investor.

Quebec Precious Metals has a market cap of CA$9.92 million and 94.5 million shares outstanding. It trades in a 52-week range of CA$0.13 to CA$0.06.

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